The financial health of utility companies and the survival of tropical rain forests dont look like related issues. But are they?
The Southern Company is spending $300,000 to find out. The company believes the money, awarded to the Smithsonian
Tropical Research Institute, will help researchers learn more about how trees absorb carbon dioxide, storing it away as
wood fiber -- and whether this process can offset carbon dioxide emissions from power plants thousands of miles away.
Such data could be of enormous use to an industry wrestling with how to control carbon dioxide emissions while avoiding
costly control measures that can impede economic development.
"If absorption of carbon dioxide by trees is quantifiable, we should be able to come up with a formula saying something like,
X number of trees equals Y pounds of carbon dioxide eliminated, " said Bob Woodall, The Southern Companys vice
president of environmental policy. "Thats oversimplifying the formula, but its basically how the concept would work."
Tree planting already is popular with utilities seeking to show their environmental good will. Hard data about the value those
trees have in "sequestering" -- that is, removing -- carbon dioxide from the air would help utilities show just how much of a
contribution those newly planted trees are making.
Its not new science. Researchers know that trees absorb carbon dioxide, and for years have had a rough idea of how much
is absorbed and converted to wood fiber. More precise numbers are needed, however, if utilities want to show a direct
relationship between emissions and the planting or preservation of trees.
Such enhanced data also could place new value on the rain forests, which have been shrinking in parts of the world.
The study, funded by The Southern Company in October 1994, will continue through 1997 in Panama, Ecuador, Sri Lanka,
and other parts of a worldwide network of research sites overseen by the Institutes Center for Tropical Forest Science.
While looking at the long-term benefits of tropical forests, the Smithsonian scientists will try to determine whether an
economic argument can be made for preserving rain forests because of their carbon sequestration abilities. A team of
Harvard economists will help with the study.
Theodore Panayotou, director of the International Environment Program at Harvard Universitys Institute for International
Development, believes carbon sequestration has been grossly undervalued, and plans to test his theory with data obtained in
He has rough numbers already. There are three basic uses of rain forests, he said: You can clear them for agriculture, you
can use them for controlled, sustainable timber production, or you can preserve them.
Without carbon sequestration numbers, the economic value of a rain forest seems in most cases to lie in clearing the land for
agriculture and selling the wood. His research shows land conversion is worth about $3,000 a hectare, compared to $2,000
a hectare for sustainable timber use and $1,500 a hectare for preservation, which covers the value of soil and water
conservation, tourism, and biodiversity, as well as other environmental factors.
But those figures dont account for the value of carbon sequestration in a world increasingly worried about the potential
impact of greenhouse gases. Carbon sequestration alone is worth about $3,000 a hectare, Panayotou theorizes, bringing the
value of preservation to $4,500 a hectare.
"It turns out carbon sequestration is the dominant value," Panayotou said. Definite proof of that value could lead to
bottom-line results for utilities. Electric utilities are dealing with the issue at a time when demand for electricity -- and
consequently, carbon dioxide emissions -- is increasing.
The Southern Company (NYSE:SO) is the parent firm of five electric utilities: Alabama Power, Georgia Power, Gulf Power,
Mississippi Power, and Savannah Electric. Other subsidiaries include Southern Electric International, Southern Nuclear, and
Southern Company Services. The Southern Companys common stock is one of the 20 most widely held corporate stocks
Reduction of carbon dioxide emissions now comes by finding ways to reduce demand or switching to lower carbon fuels,
which generally are more expensive and sometimes unavailable. Both methods bring added costs, a serious problem for an
industry also facing increasing competitiveness.
The project also could help utilities comply with voluntary or government mandated restrictions on carbon dioxide emissions.
Data from the Smithsonian even could lead to a system of utility credits for forest preservation and tree planting, similar to
the sulfur dioxide allowance trading system now in use as a means of combating acid rain, Woodall said.
Big questions remain beyond this study, however. What trees, or mix of trees, work best? Which is better, preserving old
forests or planting new ones?
The answers arent simple. Many conservation groups favor preservation of mature forests. Others favor replanting
"Its not traditional to think of corporations as environmental activists. But in this case were looking at some fairly traditional
environmental issues," Woodall said. "As we begin to get new data out of this study, utilities could become a major force in
the greening of the planet."